Regulators Say Southland Builders in Kickback Pact

Colorado insurance regulators said several large home builders, including Los Angeles-based KB Home and Newport Beach-based William Lyon Homes, guaranteed business to Santa Ana-based First American Title Insurance Co. in exchange for kickbacks.

The builders' names were disclosed to the state by First American Title as part of a state investigation, Erin Toll, Colorado deputy insurance commissioner, told the Denver Post in a story published Thursday.

Last week, First American agreed to pay $24 million in refunds stemming from the alleged kickbacks in the five states where it made deals with builders. It admitted no wrongdoing.

The allegations involving First American and other title insurance companies have led to investigations in 15 states, including California.

Lenders require title insurance to guarantee there are no other ownership claims on a property they are financing. To lock in lucrative deals, the title insurers allegedly would refund part of the title premium to builders, lenders and brokers. Recipients of the kickbacks created reinsurance firms that would purportedly share risks with the title companies -- but were shams because they never paid a claim, state officials say.

KB Home spokeswoman Kate Mulhearn said, "We believe that our business and our relationships have been fully compliant with applicable regulations."